UNIT 4.6 - PLACE
PG. 576
What is Place?



The distribution of a product ie. How the product gets
to the consumer
“getting the right products to the right customers at the
right price in the right place and at the right time.”
Place can be through:
 Warehouses
 Agents
 Retail
stores
 Internet
What is Place?

Stores have limited space so will only stock products
that will sell
 EX:
Cinemas have limited seating so will only show
popular movies
 Marketers must convince stores to stock their product
over their rival

Businesses use distribution channels (retail,
internet) to get their product to customers
Traditional Channels of Distribution
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Since most products are not sold straight from
manufacturer to customers so businesses must use
intermediaries – middle person in the chain of
distribution – manufacturers, wholesalers, retailers
A long chain of distribution will raise or lower
prices?
Types of distribution channels:
 Zero-level
channel
 One-level channel
 Two-level channel
Types of Intermediaries

Wholesalers
 Between
producer and retailer
 Break large quantities into smaller units for retailers
 Bear the costs of storage
 Allow producers more time to focus on production
 Disadvantage: producer passes responsibility of
marketing to wholesaler

Distributors
 Trade
products of only a few manufacturers
Types of Intermediaries

Agents
Negotiators on behalf of buyers and vendors
 Helps sell products
 EX: real estate agents, insurance agents, door-to-door,
telemarketing
 Charge commission of % of sales made


Retailers
Sellers of products to consumer (stores)
 Advantage: can reach large # of consumers
 Types:

Independent – sells small range of products
 Multiple – several outlets EX: McD’s
 Supermarkets – sell mostly foods
 Hypermarkets – superstores; sells food AND consumer durables
 Department stores – sells furniture, jewelry, clothes, toys

Direct Marketing as a COD
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
Direct marketing – direct selling of products to
consumers. NO intermediaries
Advantages:
 No
intermediaries therefore greater profit
 Direct control over marketing
 Boom in internet so direct marketing is more popular
 Can reach customers who live far from retail outlets
 Usually cheaper than ATL

EX: telesales, e-commerce, direct mail, vending
machines
Direct Marketing as a COD

Telesales (telemarketing) – using telephones to sell
products directly to customers
 Can
use sales people, automated voice, text message
 EX: insurance, satellite tv company
 Disadvantage:
 Mass telephone calls can be costly
 Many people do not like ‘cold calls’
Direct Marketing as a COD

E-commerce – trading via internet
 More
businesses are using websites to entice customers
all around the world
 Reduces costs/risks of international marketing
 However, not all products can be sold online
 Cars,
 This
jewelry, food
is a growing channel of distribution
Direct Marketing as a COD

Direct Mail – sending promotional material thru the
mail system
 Used
by: banks, local restaurants, fast-food
 Advantages:
 personalized
communication service bc it uses addresses of
customers
 Low costs
 Detailed info aimed at diff market segments can be used
 Disadvantages:
 Low
response rate bc people ignore mail
 Contact info on customers can be out of date
Direct Marketing as a COD

Vending Machines – specialist machines that stock
certain products such as: cigarettes, drinks, snacks
 Advantages:
 Can
be placed almost anywhere
 Multiple payment methods – convenient
 Low maintenance costs
 Disadvantages:
 Prone
to vandalism
 Mechanical failures stops sales
 Can only sell a small range of products
Choosing an Appropriate Distribution
Strategy
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
An efficient and cost-effective distribution strategy
increases likelihood of customers purchasing the
products
5 factors affecting distribution decision:
 Cost
and benefits – agents are cheaper but retailers can
reach more customers
 Product – flowers/meats would need shorter COD.
DVDs/CDs best sold through internet
 Market – small markets need no intermediaries
 Time – urgent delivery of product needs direct COD
 Legal constraints – license to sell alcohol, anti-gambling
laws
Place and Business Strategy
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Marketing managers must deal w/ 2 key issues:
 The
best COD to use
 How it will ensure that intermediaries will want to stock
their products

When choosing a COD or which intermediaries to
use they must decide on the most suitable TYPE:
 Intensive
distribution – mass produced products
 Selective distribution – producer chooses suitable
intermediaries
 Exclusive distribution – less common; specially chosen
intermediaries given the right to sell a certain product
Place and Business Strategy
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Some companies want as many outlets to sell their
products ie. Coca-Cola
 Others
do not want many outlets ie. Rolls-Royce, Tiffany
& Co.

To ensure an outlet will sell their product, a company
can:
 Open
their own store (expensive) ie. Nike, Adidas
 Company can use franchise agreements – allow other
certified people to run the store under business name
ie. 7-11, Pizza Hut, Burger King
Place and Business Strategy

If a company wants complete control over all its
marketing activities company can use:
 Vertical
integration – growth strategy that unifies
supplier, producer, wholesalers, and retailers
 Will
have more direct control over its supply chain and
distribution channels
 However, this is usually not a realistic option, so businesses
will have to go back to competing for floor space
Place and Business Strategy

Companies can use branding as another strategy
 Companies
of popular brands will have preferential
distribution channels. Distributors and retail stores will
want to stock their products.

Exporting has benefited international trade
 However,
exporting has some complications:
 Fluctuating
exchange rates
 Government intervention
 Language barriers
 Cultural differences

Internet has greatly decreased costs. Rising popular
distribution method